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The impact of financial insecurity on the self-employed’s short-term psychological distress: Evidence from the COVID-19 pandemic

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  • Patel, Pankaj C.
  • Rietveld, Cornelius A.

Abstract

The earnings of the self-employed are relatively low and volatile, a risk that exacerbated during the recent COVID-19 pandemic. Using three two-weeks-apart waves of data from the Understanding America Study, we show that relative to wage workers, the self-employed experience greater psychological distress through self-reported financial insecurity (the chance of running out of money). Using additional cross-sectional data from the COVID-19 Household Impact Survey, we show that the self-reported chance of job loss disproportionally impacts the psychological distress of the self-employed. Together, these results underscore that the economic uncertainties induced by the COVID-19 pandemic hit the self-employed particularly harsh by deteriorating short-term psychological distress. Moreover, our study is informative about the impact of income uncertainty on psychological distress.

Suggested Citation

  • Patel, Pankaj C. & Rietveld, Cornelius A., 2020. "The impact of financial insecurity on the self-employed’s short-term psychological distress: Evidence from the COVID-19 pandemic," Journal of Business Venturing Insights, Elsevier, vol. 14(C).
    • Handle: RePEc:eee:jobuve:v:14:y:2020:i:c:s2352673420300627
    DOI: 10.1016/j.jbvi.2020.e00206
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    More about this item

    Keywords

    Financial insecurity; Psychological distress; Self-employment; COVID-19;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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